Ecommerce Fulfilment is the process of receiving, storing, picking, packing, and shipping products to customers. It is a critical part of any business both online and offline that require items to be sent to end customers and retailers to manage wholesale supply chains, the cost of fulfilment can vary depending on a number of factors.
Factors that Affect Ecommerce Fulfilment Costs
Not all 3PL / Fulfilment Warehouses operate in the same way. The following are some of the factors that affect ecommerce fulfilment costs:
The size and weight of your products. Larger and heavier products are more expensive to ship, so you will need to factor this into your fulfilment costs. Most domestic (UK) couriers and the Royal Mail will have specific restrictions per service but they may have a ‘large’ service to cater for specific bigger items.
The number of products you sell. If you sell a large number of products, you will likely be able to negotiate lower fulfilment rates with a third-party logistics (3PL) provider. This is not simply for storage purpose but picking costs will vary if you can prove sales numbers and numbers of items picked as this will have an effect on the labour allocation to process your orders.
The location of your customers. Shipping costs vary depending on the distance between your warehouse and your customers. Nationally and internationally all have base costs, fuel surcharges and possible duty/tax payments. This is not always true for domestic shipments as most Royal Mail and next day courier services will cover most of the UK for a fixed cost. But the outer reaches of the UK and international shipments will understandably need more logistics to carry your goods to their end location.
The type of fulfilment services you need. Do you need your products picked, packed, and shipped individually? Or do you need a more comprehensive fulfilment service that includes returns processing and customer service? Most fulfilment services have the ability to give you fixed picking costs as well as a rate card for all packaging materials used. Remember each order may need a different size outer shipping carton and utilising various shipping methods to give great service, but to manage your profitability.
Average Ecommerce Fulfilment Costs
The average cost of ecommerce fulfilment per order is between £0.40 and £3.00 to pick/pack and add packaging to an order. However, this can vary widely depending on the factors listed above. For example, if you sell large and heavy products, your fulfilment costs will be higher. Similarly, if you sell a large number of products, you will likely be able to negotiate lower fulfilment rates.
With three main cost centres within Ecommerce Fulfilment, Storage Pick/pack, Dispatch. You need to ensure when looking at all 3PL providers that all costs are exposed and understood so you are not caught out.
How to Calculate Your Ecommerce Fulfilment Costs
To calculate your ecommerce fulfilment costs, you will need to consider the following factors:
The cost of receiving your products. This includes the cost of unpacking, inspecting, and storing your products. Storage can be calculated in various ways. Make sure you understand how you are being charged and apply the calculations to your order forecast to make sure you are profitable. You will see phrases like ‘Per Pallet per week’, volumetric and pick bay charges. Each have their place, but make sure you are being charged fairly.
The cost of picking and packing your orders. This includes the cost of picking the correct products from your warehouse, packing them in the appropriate packaging, and labelling them for shipping. Most fulfilment warehouses will look at the numbers of items to pick to calculate their costs to you. You may have a low number of orders, but the orders might have a lot of items that need picking, barcode verifying and packing. Or vice versa, you may see a lot of orders with single picks per order. Each requires picking stations to manage these types of orders and dispatch them on time and within your budget.
The cost of shipping your orders. This includes the cost of shipping labels, postage, and any other shipping-related fees. You may have a tier of shipping charges i.e. spend a certain amount and receive next day shipping or an upsell to track the items your consumer has purchased. Ask for recommendations from us, couriers rates change regularly and it maybe worth looking at a courier you have never thought of to guarantee quality of delivery.
The cost of returns processing. This includes the cost of receiving returned products, inspecting them, and processing refunds or exchanges. This is a reverse picking process and can often require more labour to analyse and ensure the returned order is managed correctly giving you the information to make a judgement call on the next stage of the order.
Once you have considered all of these factors, you can estimate your total ecommerce fulfilment costs. This will help you to determine how much you need to charge for your products in order to cover your fulfilment costs and make a profit.
How to Reduce Your Ecommerce Fulfilment Costs
There are a number of ways to reduce your ecommerce fulfilment costs. Some of these include:
Opting for a 3PL provider that offers lower fulfilment rates. But be careful of headline figures. We all have to pay staff to manage processes and warehouses obviously have overheads to be secure, manage processes and look after your stock appropriately. There are a lot of cost centres and ways to present charges, make sure you understand how you will be charged.
Shipping your products in bulk. This can help you to save on shipping costs. Pallet networks can be some of the cheapest ways to ship your goods across the UK and beyond.
Optimising your packaging. Using lightweight and sustainable packaging can help you to reduce your shipping costs. Make sure that cutting costs is not exposing your valuable products to potential damage. The carrier will only insure specific types of packaging, make sure it ticks all the right boxes.
Reducing the number of returns. This can be done by offering clear and concise return policies, and by making it easy for customers to return their products.
By following these tips, you can reduce your ecommerce fulfilment costs and improve your bottom line.
The cost of ecommerce fulfilment can vary depending on a number of factors. However, by understanding the factors that affect your fulfilment costs, you can estimate your total costs and make sure that you are charging enough for your products to cover your costs and make a profit.
Talk to us about how best to approach your e-commerce fulfilment and how we can work together to manage your order workflow. Without your success, we have none.
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WE STORE
Securely and efficiently in our heated Warehouse
Our warehouse is our own, We have a large space able to securely store pallets from only £2.00 per week, boxes and goods on pick pack bays ready for your customers to order. Come and see us.
WE PACK
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Daily order processing from £0.50 per order or contract packing projects, we work with them all. Receiving orders from all sales channels we can pick/pack and dispatch the same day of order regardless of volumes.
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WE DISPATCH
Any size of consignment, anywhere in the world.
Our teams work with all packing suppliers as well as the National Couriers, Royal Mail and Pallet Networks all day every day. Talk to them about how to ship your orders securely and efficiently.
We have so much to give!
We are all about the best reviews
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Your brand and online presence will not grow if your fulfilment partner lets you down with poorly packed and mispicked items. We are all hunting for the 5-star review and together we actively work on providing the processes and tracking to keep you and your customers informed.
Your 3PL Ecommerce Fulfilment, Distribution Centre and Contract Packing partner. Planned, Integrated, Packed and Delivered.
T: 01242 802140
CBF Fulfilment
1-11 Alvin Street
Gloucester
GL1 3EJ
UNITED KINGDOM
